Safety Programs are a Worthwhile Investment

"safety is one benefit that employers are increasing"

"many companies have developed safety incentive programs that encourage employee buy-in."

by Kathleen Garrity (December 08, 2003)

As the costs of employee benefits soar and some companies are forced to cut benefits in order to survive, safety is one benefit that employers are increasing -- and finding that it more than pays for itself. But safety hasn't always been viewed that way.

Construction workers tend to think of themselves as invincible and often act accordingly, so "avoidable accidents" -- like not wearing a safety harness "just this once" -- can injure or kill. In the absence of established safety standards and with few statistics to help identify possible hazards, injuries -- even fatalities -- were once accepted as inherent in the construction industry. No more.

"Prior to passage of the Occupational Safety and Health Act (OSHA) in 1970, safety standards, compliance and enforcement were a political football," said Bill Corrigan of Compass Consulting Corp., one of the earliest OSHA employees. "Inspectors were political appointees, often some official's relative with no particular qualifications. There were few rules, enforcement was lax, and incident rates were horrendous."

In the past decade or more, employers have changed their attitude and now view safety as an employee benefit and a competitive advantage rather than a cost of doing business. Sending workers home in the same condition as they came to work is now their guiding principle -- so contractors invest heavily in safety programs.

According to the U.S. Department of Labor, since OSHA was created workplace fatalities have been cut in half, and occupational injury and illness rates have declined 40 percent, while at the same time U.S. employment has doubled.

"The tangible costs of equipment, training, employee time off the job for classes and the safety officer's salary can be measured as a cost of doing business," said Kelley Albert, safety director for Artistic Drywall Textures in Arlington. "But when a $2 pair of safety glasses prevents an eye injury that could have left someone blind for life and cost thousands of dollars in medical expenses -- that is priceless."

In addition, employers with good safety records can earn refunds on workers' compensation premiums through retrospective rating programs. A good safety record and low claims can earn companies substantial refunds on their industrial insurance payments to the state Department of Labor and Industries. The safest contractor in our retro program earned a 63 percent refund on their L&I payments. With workers' compensation insurance rates up an average of 29 percent this year and 19.4 percent proposed for next year, employers are highly motivated to find ways to recoup some of those increases through retro refunds.

As a company's claims go down, their Experience Modification Rate (EMR) or "mod rate" improves, and their L&I premium rate declines over time. (L&I develops the mod rate by looking at a three-year history of an employer's claims and then calculating the safety of the employer -- the lower the rate, the safer the company.) This lowers the company's overall labor cost, making it more competitive than a contractor with a higher rate. On negotiated or short-list projects, more and more owners are asking about safety records as part of the contractor selection process.

Individual workers also see the direct financial benefit of safety programs. "Not only does safety pay dividends, but as companies lower their mod rate each employee also benefits by paying lower taxes for the worker's portion of the L&I premium," said Nancy Burress of S.D. Deacon Corp. of Washington. For example, a carpenter's portion of the L&I payment in a company with a mod rate of 1.0 is $168 per year. If the company's mod rate improves to 0.5, the worker will save $83 per year.

"A good safety program entails far more than a plan, training and equipment," said Linda Browning, safety officer for Kirtley-Cole Associates. "Equipment is only good if it is properly used and, to be effective, plans must be implemented and rules enforced."

By law, every general contractor must have an accident prevention program, plus site-specific and fall prevention plans in place. In addition, each subcontractor must develop and submit its own plan to the general contractor before it begins work on the job. The plans can range in length and complexity, from a 20-chapter document that covers everything from the responsibilities of the company president to what to do in case of an auto accident on the site, to a simpler document for smaller firms. Each employer must also have a plan for each job site that addresses specific hazards such as trenching, fall protection, scaffolding, electrical work and cranes found on individual projects.

Yet, even with all that planning in place and providing ongoing training and safety equipment, to truly see changes in the way people work, companies must create a positive safety culture. And creating that culture must begin at the top of the organization and work its way down.

"We empower all of our workers to take ownership of the safety process," said Browning. "If proper equipment isn't available at a site, our workers know not to begin a task until it arrives. Violating a company safety rule causes disciplinary action or possible termination."

To overcome the seeming inconvenience of some safety practices -- safety glasses can be hot to wear in warm weather, and gloves can be cumbersome for some tasks -- many companies have developed safety incentive programs that encourage employee buy-in. Incentive programs vary, but essentially they are designed to reward workers for upholding high safety standards and also for holding their fellow workers accountable for safe behavior. Some programs award points or chips based on performance that can be redeemed for desirable merchandise such as expensive tools and work clothing. Others provide cash or merchandise if the overall company performs safely. In any case, safety rewards become sought-after status symbols within the company.

Unlike health, disability, life insurance and retirement plans that are tending to be cut as their costs skyrocket, safety is a true win-win situation. The workers go home to their families in the same condition they reported to work and feel more pride as craft professionals. The employers lower their labor costs and improve employee morale. The industry as a whole improves its identity, which helps attract more and better workers to construction.

KATHLEEN GARRITY is the president of Associated Builders and Contractors of Western Washington, an organization of nearly 400 contractors, professionals and suppliers in the construction industry.

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